SBA 504 Blended Rate Calculator

A 504 deal is not one loan. It is a bank first mortgage, a CDC second built on an SBA guaranteed debenture, and your own cash, and those pieces carry different rates over different numbers of years. Simply enter your project cost and the two rates to see each note on its own line.

SBA 504 blended rate calculator

How the 504 stack works

What Is the 50/40/10 Split?

Most 504 projects fund at 50% bank, 40% CDC debenture, and 10% borrower cash. Those are the shares 13 CFR 120.900 calls typical, and they are where the calculator starts.

The bank takes a first lien for its half. The CDC takes a second lien behind it. Your 10% is not financed by anyone, which is why it sits on its own line in the output and never enters the blended rate.

When Does Your Down Payment Rise to 15% or 20%?

Two conditions each raise the minimum contribution to 15%. The first is a new business, which the 504 rules define as a borrower that has operated for two years or less, or the operating company if the borrower is an eligible passive company.

The second is a limited or single purpose building you are buying, building, converting, or expanding.

Hit both and you put in 20%. The two increases do not stack past that.

Note that the two-year test belongs to the 504 program. The 7(a) start-up test runs one year, so it is easy to bring the wrong number to the table if you have shopped both.

Which Piece Shrinks When You Put More Down?

The CDC's. This is the part most 504 explainers get wrong.

At 15% down the debenture funds no more than 35% of the project. At 20% down, no more than 30%. On those two deals the third party loan has to cover at least half the project cost, so the calculator holds the bank at 50%. At 10% down there is no such floor, and 50% is the typical share rather than a required one.

So the extra money you bring buys down the fixed rate piece, not the bank's. Your average cost of debt goes up, not down.

What Is a Debenture?

The CDC does not lend you its own money. It issues a debenture that SBA guarantees 100% with the full faith and credit of the United States. SBA pools debentures, an underwriter sells the pool, and investors hold certificates against it.

That is why nobody quotes you a 504 rate the way a bank does. The rate is set at a sale. Twenty and 25 year debentures pool monthly, 10 year debentures pool every other month, and SBA normally sells and disburses on the Wednesday after the second Sunday of the month.

Why Is the CDC Note Bigger Than 40% of Your Project?

Because the upfront fees are financed into it. The debenture is written for a gross amount and you receive the net.

SBA's pricing steps add its 0.50% guaranty fee, a 0.25% funding fee, and the CDC processing fee of up to 1.5%, all figured on the net proceeds. Financed closing costs of up to $10,000 go on top.

That subtotal is divided by 0.996 to carry the underwriter's fee, then rounded up to the next even $1,000. In SBA's own worked example a net 504 loan of $350,000 becomes a gross debenture of $362,000.

Size the CDC note at a flat 40% of project cost and you understate the balance you are actually amortizing.

Manufacturers get a break here. SBA waives the 0.50% guaranty fee on 504 loans to small manufacturers with a primary NAICS code in sectors 31 through 33, which drops the fee input from 2.25% to 1.75%.

Fee steps, the 0.996 divisor and the $362,000 example are from SOP 50 10 8, Section C, Chapter 3, effective June 1, 2025. The 0.50% guaranty fee is the FY2026 figure in SBA Information Notice 5000-871532 and covers loans approved through Sept 30, 2026. Confirm both with your CDC before relying on them.

What your money actually costs

Is the Debenture Rate the Rate You Pay?

No. The rate printed on the debenture is the investor's coupon, and your note carries ongoing fees on top of it. There are three.

A CDC servicing fee of at least 0.625% and no more than 2% a year. An SBA annual service fee, 0.209% for loans approved in fiscal 2026 against a regulatory ceiling of 0.9375%, and waived outright for manufacturers. A central servicing agent fee whose amount SBA does not publish.

Ask your CDC for the effective rate, the one with those ongoing fees already in it, and put that number in the calculator. Enter the bare debenture coupon and the 504 payment comes out low.

Fee ranges are at 13 CFR 120.971. The 0.209% annual figure is from SBA Information Notice 5000-871532 and applies to loans approved Oct 1, 2025 through Sept 30, 2026.

Does the 504 Payment Stay Flat?

Not quite. Both the CDC servicing fee and the SBA annual service fee are figured on the unpaid balance as determined at five year anniversary intervals, so the fee slice of your payment holds for five years and then resets against a smaller balance.

The calculator shows one level payment. Treat it as an average across those steps rather than the exact number on your coupon book.

How Is the Bank Rate Set?

By the bank, inside a ceiling. SBA caps the rate on any third party loan funding a 504 project at New York prime plus 6.00%, or the state usury limit if that is lower, and it bars the lender from escalating past that ceiling after a default. Rates otherwise have to be reasonable.

The bank note also cannot carry an early call feature, a demand clause outside default, or open ended future advances once the project is complete.

Can the Bank Note Balloon?

Yes, and most of them do. SBA permits a balloon on the third party loan as long as the lender justifies it in the loan report and it is identified in the terms and conditions SBA issues. The debenture never balloons. It fully amortizes to zero.

That mismatch is the reason this page exists. A 10 year bank note against a 25 year debenture gives you one payment for 120 months, a balloon, then a much smaller payment for 180 months more. Averaging those two coupons together tells you almost nothing about what the deal costs.

How Long Can Each Note Run?

504 loans run 10, 20, or 25 years, and the maturity follows the remaining useful life of what you are financing. Real estate reaches 25 years. Machinery and equipment runs at least 10. On a mixed project the majority of loan proceeds decides which rule applies.

The bank note has a floor of its own: at least seven years against a 10 year 504 loan, and at least 10 years against a 20 or 25 year 504 loan.

How Much Can the 504 Piece Be?

The debenture minimum is $25,000. The general maximum is $5 million outstanding across the business and its affiliates. Small manufacturers with a primary NAICS code in sectors 31 through 33 reach $5.5 million per project, and so do projects that cut the borrower's energy consumption by at least 10% or that generate renewable energy or renewable fuels.

Meeting a public policy goal does not raise the $5 million ceiling. That one circulates constantly and 13 CFR 120.931(b) says the opposite.

What Is Your Blended Rate, Really?

Not the average of the two coupons. Weighting by principal ignores time. It misses the balloon, it misses the years when only the CDC note is left standing, and it undercounts the slower payoff on whichever note carries the higher rate.

The calculator builds the actual month by month payment stream and solves for the single monthly rate that prices it. The answer lands between your two rates, pulled toward whichever note holds your money longer.

How Does the Calculator Compute?

Math, of course! Your two eligibility answers set the contribution and the CDC share, and the gross debenture runs SBA's fee steps and the even thousand rounding.

Each note then gets a standard amortizing payment. The balloon is the bank balance at the end of the bank term, and the blended rate is solved by bisection on the combined cash flows.

Get a quote to see what a real CDC and a real bank will do with your project. Tell us what you are buying, what it costs, and how long you have been operating, and we route it to SBA lending partners. Free, no obligation.